August 15, 2010

“In Their Own Words”: Microsoft’s Legal Cloud Computing Strategy: Not 'All or Nothing'

Cloud computing is without a doubt the biggest 2010 technology trend, buzzword, initiative, pipedream … not only in legal, but across any number of verticals. Call it what you may, but with every mention of
“we’re going to the cloud”, comes the chatter from naysayers who claim cloud alternatives are not yet proven, not yet widely available, and definitely not viable for large scale, enterprise level, business use. Enter Microsoft, who with a 15 year track record of delivering cloud solutions, is still being pulled into the "not yet ready for prime time/unproven" debate.

So, in order to more accurately understand what legal hosted services Microsoft is currently offering, how these complement and/or enhance its proven desktop suites, and why there is a viable Redmond-based alternative to Google Apps after all, InsideLegal opted to go straight to the source and chat with Norm Thomas, Microsoft’s Industry Market Development Director, Legal Industry Solutions.

Those who have been following Microsoft’s steady move into legal within the last decade undoubtedly have heard of or seen Norm at major legal industry events including ILTA’s Annual Conference, LegalTech, ABA TECHSHOW and ALA’s Annual Conference. Along with Brian Zeve, his boss and Managing Director for Microsoft’s U.S. Professional Services Industry, Norm has been expertly carrying the company’s legal enterprise strategy torch and seeking honest feedback from legal IT thought leaders and firm decision makers.

Our conversation comes on the heels of our coverage of Bradford & Barthel's move to Google Apps that beckoned the question, “What is Microsoft doing in the legal cloud, and why don’t we know about it?” In response to that coverage, several InsideLegal readers posted comments and wrote in with questions related to Microsoft’s scope of cloud services, specific functionality, licensing and security concerns, and broader business and legal vertical strategy inquiries.

Here’s InsideLegal's exclusive Q&A with Norm:

PRODUCTS: LEGAL CLOUD SOLUTIONS, FEATURES AND FUNCTIONS

IL: Please provide some background on Microsoft’s cloud offerings and clearly articulate what is available now. What will be coming later? And when?

NT: Microsoft has been in the cloud for more than 15 years now and our cloud services are pretty diverse. You mentioned that a lot of people are familiar with Google and that’s because that is what they use at home. Our cloud services include Hotmail, launched 17 years ago, with 350 million users, Xbox Live with more than 6 million active accounts and even Windows Update services date back to Windows 2000 and XP. So when people ask if we’re doing this to catch up, we like to point them to this strong history. Overall, cloud-based services offer Microsoft almost as many benefits as they do to law firms. And while our biggest competitor for new user acquisition is previous versions of Office and Windows, we see that making the move to the cloud addresses a lot of upgrade bottlenecks and concerns. Specifically, the ease of migration, upgrade and deployment in the cloud environment has made a big difference for users and IT.

With respect to the legal industry, we have offerings that allow customers to take advantage of cloud computing on their terms, meaning that we deliver software, tools and guidance that enable them to realize the benefits of cloud computing with the reliability and security of on premises software. One is Windows Azure, focused on developers and software development in the cloud, and the other is Microsoft Online Services – Exchange Online, SharePoint Online, Office Communications Online, Dynamics CRM Online, etc. - that makes it easy for law firms to leverage and rapidly deploy familiar Microsoft products as flexible services.

These Online Services essentially give you various deployment options - run it on the server, run it in the cloud or on the client. With Office Web Apps, the browser experience will be lighter but requires no additional training and speaks to our approach that you don’t have to put all or nothing in the cloud. While we have trouble imagining fee earners editing 400 page commercial lease agreements through a browser, there will be hybrid scenarios where certain workloads are out in the cloud and others remain on the desktop. On top of that, all this is also enabled on mobile devices so there’s no new user experience and associated learning curve. The changes to the end user are invisible.

IL: Why is there the general market perception that Microsoft is playing cloud "catch-up" and lagging behind other, more agile players (even if just perceived) like Google?

NT: The entire industry’s IT mentality needs to expand and understand the cloud is not an “all or nothing” proposition. And, Microsoft is already handling certain workloads out in the cloud (virus scanning, spam filtering, archiving, DMS data stores) and developing hybrid options in many other areas.

In many respects, we are all collectively going to be staring down the barrel of a gun if we take the entire law firm infrastructure and the desktop environment and expect attorneys to be satisfied using only the browser. What Microsoft says is, "software is software." You can run it anywhere you choose, whatever makes the most sense for your firm. If you want to take parts of your messaging environment and put it out on the cloud, you can do that on our data center, keep it on premise as most firms do now, or work with a Microsoft partner’s data center, or even turn your own server farm into the firm’s private cloud data center. This scenario might be a good solution for firms that are in a consolidation phase and are looking to streamline server infrastructure. In doing so, legal IT can alleviate a great deal of costs, inefficiencies and create what we call economies of skill, by freeing up internal resources in the operations and maintenance environments.

IL: What was made available this year in May when Office 2010 was launched to all business customers?

NT: In May, Microsoft introduced Office 2010 and SharePoint 2010. Included in this launch was Microsoft Office Web Apps, the online companions to Word, PowerPoint, Excel and OneNote. Office Web Apps allow users to work from virtually anywhere, providing easy access to documents while preserving the look and feel of a document regardless of device. So, all the applications are all available with an Internet connection and "deskless" workers can access apps from a SharePoint cloud for example. Again, Microsoft is truly committed to the cloud and is taking all the knowledge gained from 15 years of cloud development and making all its products feature compatible no matter where they are located. Currently, 70% of Microsoft’s 40,000 employees who are involved in building software are working on entirely cloud-based or cloud-inspired projects; this will be 90% by the end of this year.

IL: How does the Office Web Apps/online feature set compare to the familiar Office desktop?

NT: In general, use of the Office desktop applications is not required to use the Office Web Apps. However, many common usage scenarios will involve use of the Web Apps in conjunction with the desktop apps - using Office Web Apps for fast, lightweight editing and easy sharing, and using the desktop applications for deeper editing and full functionality. Microsoft Office Web Apps are the free online companions to the Microsoft Office Word, Excel, PowerPoint and OneNote applications that you already use. They enable you to access and edit your documents from virtually anywhere, as well as share and work on documents with others online, even simultaneously. They are entirely web-based and available via Windows Live, so there's no additional software to download or install. They can be used from virtually any computer whether or not it has Microsoft Office installed.

LICENSING, SECURITY AND RELIABILITY

IL: Where do you see Microsoft moving from a licensing perspective for its software products as the industry moves towards cloud-hosted collaboration, and a pricing model based on a per user annual fee?

NT: Currently, existing Enterprise Agreements make it difficult to accommodate additional users and honestly present complex scenarios when user counts fluctuate. With Microsoft Online Services, firms can acquire licenses based on the number of months they need access (think summer associates) and how many new users they want added and for how long. This creates a new level of flexibility that did not previously exist. Still, stable user environments provide more economic licensing solutions since there is more predictability at play. All of these scenarios are addressed as part of Microsoft’s service provider licensing agreements (SPLA).

IL: How will cloud solutions satisfy lawyers on security, confidentiality and return of data?

NT: This is a very valid and formidable concern and dictates different solutions based on geographies and local laws. For example, German law will not allow documents to leave Germany if your client is the government so how could you adhere to these requirements in a cloud scenario? Microsoft provides options for dedicated data centers for Microsoft Online Services to ensure that clients know where their documents are being stored. There is also premise security - the concept of controlling the physical premises where the document resides. Matter security, which is a really big deal in legal, also takes into account the potential need for ethical firewalls, to protect data from potential conflict scenarios within the firm.

IL: How does Microsoft’s 99.9% availability guarantee differ from others and what do you offer clients during downtime?

NT: Microsoft’s guarantee states that if you incur any downtime we will repay you financially versus giving you additional service time. Our standard guaranteed reliability is 99.9%, with no minimum number of consecutive minutes of downtime required in order to be considered downtime. To us, a minute of downtime is downtime. There’s no minimum threshold. In some industries such as banking or finance, customers will pay extra for extreme reliability (referred to as the four “9’s” of uptime guarantees). In legal, Outlook and Exchange would fall into this mission critical category as well.

OFFICE 2010/ONLINE SERVICES LEGAL CLIENT DRILL DOWN

IL: Who does Microsoft see as its ideal law firm client for the Office 2010 Online Services offering?

NT: Any firm that has a heavy reliance on messaging and data storage with concerns about eDiscovery/client confidentiality coupled with the managerial challenges that come from broad geographic dispersion. This means a lot of the U.K.’s Magic Circle firms are showing more interest in Online Services at the moment than some U.S. firms are. Typical firms would have major storage requirements and look to offload all that data to a trustworthy source enabling them to focus on how their users interact with their desktops.

IL: In a recent interview with CNN Money, Stephen Elop (President of Microsoft Business Division) stated that over 8.6 million people were testing Office 2010 prior to release. How large is your beta testing initiative in legal?

NT: We had three large law firms in our Technology Adoption Program (TAP) for SharePoint 2010 and Office 2010 and two in the Exchange 2010 TAP program including a Global 20 firm that was part of the Online Services beta for the 2010 release. There are a lot of on-ramps to early adoption including the product design stage, early alpha, beta, and public preview stage. The difficulty in legal in terms of Online Services adoption is the nature of the heavily customized desktop combined with the perception that cloud computing means "all or nothing." While many firms have outsourced their document repositories or messaging archives, there are currently no AmLaw 200 firms running their entire Exchange, SharePoint or SQL workloads in the cloud using Online Services. In a year from now, we expect that to be a very different story. We have already started with Wave 15 (new version of Office) planning and have technicians sitting with firms to better understand their content management and specifically e-mail management needs.

IL: According to Elop, Office’s #1 competitor is previous versions of Office - that seems especially true in legal where change takes time and upgrades are often a wait and see decision. How are you addressing this ingrained hesitation and what are you communicating to the skeptics who’d rather let somebody else go first?

NT: With the Windows 7 and SharePoint and Office 2010 releases, change management has been less of an issue. We are actually getting pulled forward by law firms instead of the other way around. Their requests are actually helping us understand what the benefits of our platform are – both on premise and in the cloud - and telling us what aspects of the solutions need to be addressed as they migrate rapidly. Our technology partners are integral in the product planning phases so they are collectively helping us with end user adoption just as we help them with their compatibility issues. At the point of launch, it has been less of a show and tell about what the product can do and more about moving forward with what we have already proven can be accomplished in the legal technology community.

FUTURES & PREDICTIONS

IL: Do you see the end of traditional desktop software suites for law firms? What does the legal desktop look like in 10 or 20 years from now?

NT: In the future, Microsoft sees three screens; the desktop, mobile device, and TV, with a seamless environment across all of them. No matter where you are, you’ll have access to the same functionality and features. We call this “continuous services.” It will be less about what the legal desktop looks like but more important to understand how lawyers and their clients want to work now, in the future, and how Microsoft can support them. Here are some predictions: Will we be getting away from word processors? Absolutely not. Will we start to collaborate differently? I think we will. Will we store and file things differently? Probably. Will we continue to differentiate between records management and document management? No, here we are already seeing the lines blurring. Will it matter what repository things are kept in? No, this will become increasingly virtual and abstract. Instead, the focus will be on access. It’s less about what the screen looks like but more about the working behavior, how much is verbal, how much is touch and how will the graphical user interface evolve to a natural user interface? I think Bill Gates is right, we’ll be able to interact with our computer more verbally, which will understand us better and emulate predictive behaviors and know our standards and requirements.

In terms of futures, more and more firms are embracing "blue sky thinking" rather than confining themselves to the next dot-rev of their DMS, and taking the blinders off when it comes to what can be done. Increasingly, clients are asking what the law firms are using so you can say many firms have leapfrogged and shed their former "technology laggard" labels.

Editor's Note: Disruptions welcome. The bigger point is that the new opportunities afforded by cloud computing and the increasing willingness for all participants to embrace the possibilities, points toward a very bright future. Software giants like Microsoft can continue to supply core applications, but at the same time really push the envelope when it comes to new developments such as cloud offerings and natural user interfaces; technology partners can tap into the development platforms like Windows Azure to develop new offerings for completely new target markets, and law firms who previously had to work with disparate, incompatible systems and were relegated to leveraging old technology, are now embracing collaborative cloud alternatives. Finally, law firm clients, who really turned up the pressure on their outside counsel to share information and automate processes, are recognizing that some firms are leveraging technology to help them and their corporate clients more effectively compete.

If you have comments on this piece or questions for Norm, please email us.